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KFC drives strong annual growth for Collins Foods

The Australian expansion of KFC and Taco Bell drove a 20.3 per cent increase in net profit to $39.1 million for Collins Foods Limited in fiscal 2019.

The food retailer, which reported its full-year earnings on Tuesday, said revenue was up 16.9 per cent on last year, at $901.2 million, thanks to KFC’s strong growth in all states, with 3.7 per cent same-store sales growth.

“Over the past 12 months we have consolidated our position as the largest KFC operator in Australia, with initiatives around digital and delivery expected to drive further growth,” Collins Foods’ managing director and chief executive Graham Maxwell said.

“Our focus on operational initiatives across our brands has underpinned another record result, with revenue now over $900 million and underlying EBITDA of $113.7 million.”

According to Maxwell, KFC’s result in Australia was driven by increasing transactions and efficiencies, which led to an EBITDA increase of 20.9 per cent to $120 million.

Additionally, the business has grown its delivery capacity through meal-delivery apps Deliveroo and Menulog, with 64 restaurants nationwide now supporting the services.

Seven new restaurants were built and opened during the financial year, while two were closed.

Collins Foods’ Taco Bell rollout in Australia continues to gain traction, Maxwell said, with the brand trading in line with expectations.

“We have now successfully opened four Taco Bell restaurants in Queensland, and continue to work on developing the pipeline for sites, with 10 restaurants planned for opening before the end of the year, including the planned entry into Victoria in early 2020,” said Maxwell.

Continuing the scaling down of its Sizzler business in Australia, Collins Foods shuttered a total of two restaurants in FY19, bringing the total number of locations to 12.

Sizzler same-store sales grew 4.4 per cent in FY19, compared to the 0.5 per cent decline the chain faced in FY18.

What’s next?

Looking toward FY20, Maxwell noted the group would continue to focus on executing its operational, delivery and digital initiatives to drive value for customers and shareholders alike.

“In our KFC Australia business, we are focused on further expanding the delivery network, rolling out and testing digital initiatives such as digital board implementation for drive-thrus, and further strengthening operational systems,” Maxwell said.

Additionally, the group plans to increase the amount of new KFCs being built, from approximately nine in the year, to approximately ten, as well as the ongoing store refurbishment initiatives.

“Our rollout of the Taco Bell brand in Australia will gain pace during FY20, with further restaurants to be opened in Queensland and the entry into Victoria in early 2020,” Maxwell said.

“We intend to complete 10 new restaurant builds by the end of the year, and we remain focused on operational performance to ensure business model returns are delivered.”